ACCA P3 Chapter 29 Budgeting and standard costing

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1. paul says

   April 7, 2016 at 5:57 pm

   Quick question on budgetary control? When comparing actual to budget – how do accountants know ‘what’s been ordered’ when performing their analysis? For example you can lift the costs from the ledger but whats the typical way of determining ‘we’ve spent 50k but there’s been 20k ordered that hasn’t been invoiced yet or paid’. I’ve heard people talk about this commitment accounting to help with this but I am unclear.

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   • Ken Garrett says

     April 7, 2016 at 6:11 pm

     If people wanted to keep track of goods ordered and not received or invoiced, the only way is to have a file of outstanding orders (orders can be moved from that once goods have been received).

     The orders will normally have the purchase price on them so the outstanding value can be estimated too. To get full information, particularly about cash flow consequences, the expected time of receipts of goods and the payment of related invoices would also have to be estimated.

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     • paul says

       April 7, 2016 at 8:14 pm

       Thank You

2. martin says

   October 28, 2015 at 2:37 pm

   Hi
   Chapter 29
   Can you explain Example page 166 in notes why the Sales prove Variance is 70-68 ?

   The expected selling price was 100 and actual SP was 68 ?

   thanks

   Martin

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   • fivedollar says

     October 31, 2015 at 6:40 am

     In my opinion, there is a typo.
     actual selling price should be 98
     the sales price variance (adverse) then become (98-100=2)*12000 unit = -24,000

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     • Ken Garrett says

       October 31, 2015 at 12:07 pm

       You are correct. The question should read that the budgeted selling price was $100 but the actual selling price was $98.

       Sorry for that and thanks for pointing it out

       It will be corrected soon.